Enforcing Campaign Regulations

This is a partial transcript of Special Report with Brit Hume, December 10, that has been edited for clarity.

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BRIT HUME, HOST: Among the people responsible for enforcing the campaign regulations Supreme Court upheld today, are members of the Federal Election Commission (search). One of them, Republican conservative, Bradley Smith finds himself in agreement, with this issue with no less liberal an organization as the American Civil Liberties Union (search). Bradley Smith joins me now.

Welcome.

BRADLEY SMITH, FEDERAL ELECTION COMMISSIONER: Thank you, Brit.

HUME: It seems to me we have got two things here. We've got restrictions on the so-called soft money. Let's get to them later.

SMITH: Right.

HUME: We also have restrictions on campaign advertising of a particular kind. What are they? And what kinds of restrictions are those?

SMITH: There are a couple of different restrictions. One is that any ad that mentions a candidate -- any broadcast, I should say, that mentions a candidate within 30 days of a primary or 60 days of a general election, is limited. It can no longer be paid for with corporate funds.

Now, most folks look at that and they say who cares if Enron can't run ads or something. But what we have to realize is that most political activity goes on by corporations. Groups like the Sierra Club (search), Right To Life (search), handgun controlling; they're all incorporated right down to all your local, little county Right To Life organizations, Friends of the Rappahannock. Or you know, all that type of thing is...

HUME: All right. I live down in Faulkier County, Virginia, and there are environmental issues that are being fought out down in that area. And if an environmental group that's incorporated wants to take an ad to call attention to a position that a local politician has taken on some environment issue, and it is two months before a general election, they can't do it?

SMITH: And they're -- you know, Congress isn't usually in session two months before the election. They're debating bills that this group wants to take out an ad and they're incorporated, and it wanted to mention the congressman or urge to you call him, thank him, oppose him, tell him to support the bill; they could not do that.

HUME: They could not do that even if it's just on an issue that is before Congress at hand and doesn't mention the election?

SMITH: Right.

HUME: Wow. Why?

SMITH: If it mentions the candidate by name. And the idea was that these ads, when they're run that close to an election, are almost always in reality ads that tend to influence the election. And therefore, should have to be paid for under the rules that apply to campaign ads, which means no corporate money.

HUME: Suppose the people that live in my general area, myself, my neighbors, and we think this congressman ought to take a certain position. And we ban together but we're unincorporated, we're just a group of neighbors and we want to buy an ad, a television ad, a radio ad. We can do that?

SMITH: If you stay unincorporated, you can. Of course, one of the -- that's one of the issues we have. In other words, the law becomes increasingly complex. And as most laws become more complex, they tend to influence or impact hardest small organizations, whether it's small businesses or whatever we're looking at, smaller unions. And it's the same thing here.

What we've done is we've created a system in which it's dominated by the lawyers, the consultants, the people that know how to play the system. And the average folks like your little group in Faulkier County isn't going to know just what they can do, they're so likely to make a mistake.

HUME: But if the local Democratic committee wants to take out an ad blasting or do any of those things, that's OK?

SMITH: Well, if the local Democratic committee is going to be limited because they will not be able to run any ads that promote, support, attack or oppose a federal candidate. So then the question would be...

HUME: Well, wait a minute. You mean the political parties cannot take ads attacking or promoting candidates within 60 days before the election?

SMITH: Well, they can again, but only if they use money raised under the federal system. So if they used money raised that's legal in Virginia, it's your local county party, for example, they would have to make sure that they're using only federal money. Or would have to make sure the ads didn't promote support...

HUME: What is federal money in this setting?

SMITH: Well, federal money is money from individuals that amounts up to $2,000. Or to a political party, it can be a bit more. But it is money -- it's basically money from individuals in limited amounts.

HUME: All right. Now, George Soros, the billionaire, currency trader and investor has said he would give up his fortune entirely to beat George Bush, if he can be guaranteed it would work. But he is clearly going to spend a lot of money this year to do that. How is he restricted, if at all, for this is an example?

SMITH: Well, one of the key things is we hear if often said that this law and today's decision will rid the system of soft money and it's not true.

HUME: Soft money being money raised...

SMITH: Soft money is unregulated money. Money from individuals, these large contributions, people talk about generally, from corporations, unions or individuals. But...

HUME: Large amounts that are above the ordinary limits that apply...

SMITH: Right. Large amounts of $50,000, $100,000 or $1 million. And what's going to happen here is that those funds instead are simply going to be spent by people like George Soros on what are already being called 'shadow parties.' In other words...

HUME: So George Soros can't give this money to the Democratic Party or another party to attack candidates. If he wants to attack George W. Bush, he has got to do it some other way?

SMITH: He can't give it to, by the way, to the Democratic Party to register voters either. I mean he can't give it to the Democratic Party for anything.

HUME: OK.

SMITH: And -- but what will happen, therefore, is that the parties will, in fact, not have soft money anymore. But the soft money won't go away. Instead, it will go into these other organizations, that people like George Soros are setting up to spend millions of dollars.

HUME: How do they work?

SMITH: Well, they work under a section of the Tax Code, called Section 527 normally. And you can do it because you are an individual contributor. And that's what they allow.

HUME: Well, what can those organizations do once they have all this money? They can't take out TV ads, can they?

SMITH: Well, they can do most anything except they can't run ads within 60 days of the election that mention the candidate by name, at least if they're incorporate. If it's an individual, he can do it.

HUME: So George Soros can buy ads in his own name, called the Committee to Beat Bush, and spend whatever he wants.

SMITH: Right.

HUME: This doesn't stop him in any way.

SMITH: That's right.

HUME: Bradley Smith, great to have you. Thanks for the explanation.

SMITH: Thanks.

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